US Tariffs Update – New Canada and Mexico tariff rates take effect

US Customs and Border Protection (CBP) has confirmed that as of 4 March 2025 the proposed additional 25% tariffs on all goods imported from Canada and Mexico have now taken effect, with the exception of energy resources from Canada being subject to an initially reduced additional rate of 10%. Simultaneously, a further 10% tariff was added to all imports from China bringing the total for those imports to 20% above the MFN rates.

Initially announced on 1 February 2025, the proposed tariffs were a result of President Trump’s national emergency declaration in response to immigration and drug trafficking concerns. With a one-month delay granted at the time of the announcement by the White House, there was an indication that key negotiations may have been settled and resolved before the imposition date, however that delay period has now elapsed.

Both Canada and China have announced their own retaliatory measures to the US tariffs, with an identical 25% tariff rate introduced by Canada on specific categories of US goods (e.g., beer, certain appliances, motorcycles, Florida orange juice etc.), while China has taken a more industry-targeted response on US imports such as poultry, wheat and dairy goods. Mexico has said that it will announce its retaliatory measures shortly.

Separately, further announcements are expected from the White House with respect to addressing trade imbalances with other key trading partners, including the EU. A full review by the economic agencies in this regard is scheduled on 1 April. However, individual product, sector, economic bloc or country measures may be announced in the interim. Measures on imports of aluminium and steel are due to take effect from 12 March.

These tariff measures will create difficulties in managing complex supply chains and increase costs for importers. Companies should take immediate action to review their import and export operations to and from the US, as well as their trade flows to Canada, Mexico and China. It will also be important for companies to have clear visibility for all their global flows to and from the US for all territories, given that a deepening of these additional tariff measures is expected directly following the 1 April deadline mentioned above.

EY can support businesses to navigate this new and dynamic trade landscape via analysis of trade flows for exposure to any new potential tariffs, consider “as-is” sourcing strategies for affected regions and investigate a holistic review of the tax and trade footprint for all affected flows in order to alleviate the impact of these tariff measures.

Contacts

If you require further information, please call your regular contact in EY or contact any of the following:

• Colin Doolin
• Deirdre Hogan
• Lewis Murphy